Shale Consolidation: Enerplus Acquiring Bakken Producer

The deal seeks to add 151,000 acres to the Calgary-based oil company's portfolio for price of $465 million.

A drilling rig in North Dakota.
Source: Bruin E&P

Calgary-based oil and gas company Enerplus announced yesterday that it is moving to purchase the private equity-backed Bruin E&P Operating in an all-cash offer of $465 million. The deal will add more than 151,000 acres to the Enerplus position in the Williston Basin in North Dakota.

Enerplus said in its announcement that 30,000 of the net acres it is purchasing are contiguous with its existing position in North Dakota.

“With immediately adjacent acreage offering strong operational synergies, Bruin's assets are highly complementary to our existing tier 1 position in the Bakken and will enable us to accelerate free cash flow growth and further support our focus on providing long-term sustainable shareholder returns,” Ian Dundas, CEO of Enerplus, said in a statement.

Additionally, Enerplus will add about 24,000 BOE to its production profile and over 100 new drilling locations and drilled-but-uncompleted wells. On a pro forma basis, Enerplus estimates that the Bruin holdings will give it more than a decade of drilling inventory.

By year’s end, Enerplus said the transaction will help it achieve $200 million in free cash flow at an oil price of $50/bbl and a gas price of $2.75/Mcf. At these commodity prices, Enerplus said its purchase price is less than three times Bruin’s projected annual gross earnings for 2021.

With private equity-funding, the Houston-based Bruin was founded in 2015 as a pure-play operator focused on extracting tight-oil from the Bakken Shale Formation.

After oil prices collapsed last April, the company saw its credit line slashed and it was forced into bankruptcy by July. When the company exited the court-supervised process in September, Bruin shed more than $840 million of its total debt load of $1.1 billion.

Enerplus Corporation-Enerplus Agrees to Acquire Williston Basin
Enerplus Bruin Williston Basin Map (CNW Group/Enerplus Corporation)
Source: Enerplus